July 22, 2015
Statement of AMWA Executive Director Diane VanDe Hei
Washington, D.C. – “AMWA is pleased to announce its support for a provision in the U.S. Senate’s DRIVE Act that will make the Water Infrastructure Finance and Innovation Act (WIFIA) a practicable source of water infrastructure financing for cities and towns across the country.
“Congress enacted WIFIA in 2014 to help municipal water systems pay for large-scale infrastructure projects. Designed to work alongside – and not to replace – the existing Drinking Water and Clean Water State Revolving Funds, WIFIA focuses on water infrastructure projects expected to cost at least $20 million and will offer competitive loan assistance at affordable long-term U.S. Treasury rates. The program will help communities carry out vital water infrastructure improvements while saving millions of dollars in financing costs.
“But as enacted in 2014 WIFIA bars communities from paying for a project by combining a WIFIA loan with tax-exempt financing such as municipal bonds – the most common traditional financing mechanism used by publicly owned water systems. Because the WIFIA statute also limits WIFIA loans to covering a maximum of 49 percent of a project’s total cost, the municipal bond financing restriction would leave WIFIA loan recipients unable to pay for remaining project costs through traditional methods. This would deter many public water systems from utilizing WIFIA at all.
“Fortunately, the DRIVE Act being prepared for consideration on the Senate floor would repeal this unworkable ban on combining WIFIA loans with tax-exempt financing. According to the Congressional Budget Office this fix would cost the federal government only $17 million over ten years – a negligible sum given that WIFIA is expected to exceed a 10-1 leveraging ratio, meaning that each federal dollar invested in WIFIA will generate at least ten dollars in infrastructure loan funding.
“Congress took an important first step last year with the passage of WIFIA, but the program could never live up to its potential as long as tax-exempt financing was restricted. We are grateful that Congress included this important fix within the DRIVE Act. Passage of the fix will finally allow WIFIA to fulfill its potential as a source of low-cost infrastructure financing for publicly-owned water utilities across the country.”
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The Association of Metropolitan Water Agencies is an organization of the largest publicly owned drinking water suppliers in the United States.
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